Bangladesh: Second Most Favored Investment Destination in South Asia

United Nations Conference on Trade and Development (UNCTAD) released its annual World Investment Report 2022 on Thursday, June 9, 2022. According to the report, FDI in Bangladesh hit a three-year high in 2021 enabling the country to be the second most investment-friendly destination after India. In 2021, Bangladesh received $2.89 billion in FDI which is 12.9% higher than previous years' $2.56 billion. It is even marginally better than the 2019s FDI of $2.87 billion. However, the 2021 FDI is lower than the 2018s record of $3.61 billion.

Compared to growing FDI in Bangladesh, our neighbour India saw a 30% decline in FDI in 2021. FDI inflows in India in 2021 were $45 billion down from a record FDI of $60 billion in 2020.

Similarly, Bangladeshi entrepreneurs have made record investments abroad compared to the previous year. Bangladeshi entrepreneurs’ investment abroad in 2021 stood at $92 million, seven times larger than $12 million in 2020.

UNCTAD highlighted Bangladesh's Dual-Gauge Railway Line Project as an example investment project that is in line with the UN’s Sustainable Development Goals. The project consists of building an 80-km mass transit system. UNCTAD also listed Bangladesh, China, Colombia, Nigeria and Turkey to have developed guidelines for sustainable banking. The goal of the guideline is to direct investment into key sustainable development areas, such as SME development, job creation, social infrastructure and agriculture.

According to the report highest receiving FDI countries are the United States, China, Hong Kong (China), Singapore, Canada, Brazil, India, South Africa, Russia and Mexico. The report also highlighted global FDI increased by 64% in 2021 compared to 2020.

However, the UNCTAD report also cautioned that this trend might not continue in 2022. The primary factor behind this stance is the war in Ukraine with food and fuel prices rising and funding falling.